The price of MATIC, the token powering the popular Layer 2 scaling solution Polygon, has been under pressure in recent days. Over the past week, MATIC has shed 10% and now sits precariously close to the lower boundary of a horizontal trading channel it’s been confined to since mid-April.
This price range, typically formed during periods of consolidation, indicates a balancing act between buyers and sellers. However, a recent uptick in bearish sentiment threatens to tip the scales.
Bearish Signals Mount for MATIC
At the time of writing, MATIC trades at $0.63, its lowest point since October 2023. The token’s price has been oscillating between resistance at $0.75 and support at $0.64 within this established channel. However, a concerning trend is emerging.
On-chain data reveals a negative weighted sentiment towards MATIC, currently sitting at -0.64. This metric analyzes the volume and sentiment of social media mentions to gauge overall market perception. A negative value indicates significantly more negative mentions than positive ones, suggesting a growing bearish bias.
Further confirmation comes from MATIC’s declining futures open interest. This metric tracks outstanding futures contracts and has dipped 8% since June 1st, to $197 million. This suggests traders are closing positions without opening new ones, a classic bearish signal.
Momentum Indicators Flash Oversold
Technical indicators like the Relative Strength Index (RSI) and Money Flow Index (MFI) paint a similar picture. Currently at 36.44 and 26.11 respectively, both indicators suggest MATIC is oversold, meaning selling pressure outweighs buying pressure.
Also Read: Polygon (MATIC) Stuck In Two-Month Range: Will June Ignite A Breakout Or Bring More Woe?
If this trend persists, MATIC risks breaking below the crucial $0.64 support level and potentially dropping to $0.61.
Can the Bulls Hold the Line?
A glimmer of hope remains for Polygon bulls. If they can successfully defend the $0.64 support and sentiment flips positive, a potential rally towards the upper limit of the channel at $0.67 becomes a possibility.
However, overcoming the current bearish pressure requires a shift in market dynamics. Only time will tell if MATIC can find its footing or succumb to the downward pressure.
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